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Understanding your attitude to investment risk

Whatever your goals, we want to be sure that the investment strategy we recommend for you is in line with your attitude to investment risk. To do this we need to consider a number of factors which include:

  • The length of time you expect to hold your investment for
  • Cash reserves you want to be available to meet unexpected circumstances
  • Your view on the potential for your earnings to grow
  • How much money you want to invest
  • Whether you have any debts
  • Your existing savings for retirement
  • Your overall view on investing
  • Your goals – and whether you really need to take on risk to achieve them
  • The impact of short-term falls in the value of your investments
  • The importance of protecting your investment from the effects of inflation
  • The question of ‘liquidity’: if you want to cash in your investments, how easy will it be to get your hands on your money?

We will offer to ask you a series of questions to establish your attitude to investment risk. Each answer produces a score and these are then aggregated, using specialist risk assessment software, to calculate your specific level of tolerance for risk, from 1 (low) to 10 (high). We call this your ‘risk profile’.

Many of the terms commonly used to describe attitudes to investment, such as ‘cautious’, ‘balanced’ or ‘aggressive’ can mean different things to different people. That’s why we aim to make our assessment of your attitude to risk as objective as possible. And that’s why the next stage of the process is a discussion about what your risk profile means.

 "We aim to make our assessment of your attitude to risk as objective as possible."